If you live in the U.S. and own a small business, tax season can be tough. Ensuring that you've properly paid Uncle Sam over the course of the year is just as important as making sure you can keep the lights on.
While most tax professionals will suggest you need to take them up on their services, especially since the Tax Cuts and Jobs Act takes effect this year, you may still want to strike it out on your own. Without comprehensive tax software, you won't be able to properly maximize your credits and deductions, and you could make costly errors. With the right program, however, you will be able to navigate not only the labyrinthine rules that make up the Federal Tax Code, but your state tax code as well.
Best for Enterprises
Best for Self-Employed Filers
Best Free Software
Best for Tax Professionals
To determine the best online tax software for small businesses and different use cases in 2019, we spent dozens of hours researching the top providers. Here is an explanation of our selection process.
Locating the Best Services
To choose the best online tax software for businesses, we started with a list of the reputable tax software companies we were already familiar with. We augmented our selection with companies we found in our research, including some from other online review lists, customer feedback and Better Business Bureau ratings. From there, we eliminated vendors that cater solely to individual taxpayers rather than business owners.
Choosing the Best Services
Of the initial set of companies on our list for consideration, 17 made the initial cut: Avalara AvaTax, BNA Corporate Tax Analyzer, Ceridian, Drake Tax, Halon Tax, H&R Block, Intuit TurboTax, Liberty Tax, Thomson Reuters ONESOURCE, Power Tax, ProtaxLink, Sigma Tax Pro, TaxAct, Ultimate Tax, UltraTax, uTax and Vertex SMB. Most of these companies were selected for a specific use case, though others fit various situations.
Researching Each Service
We then researched each finalist thoroughly. We dug into each vendor's features, watched online tutorials and how-to videos, and tested products when available. Customer ratings with the Better Business Bureau also played a factor, as they gave us insight into real customer experiences with the software. We then narrowed down the field to a handful of finalists in each category.
Analyzing Each Service
When the time came to select a best pick for each use case, we looked at a number of factors. We determined our best picks for online tax software based on features, pricing, ease of use, tax return disbursement options, filing options and access to tax preparation.
Tax Cuts and Jobs Act Compliance
While all tax software on the market is compliant with the Tax Cuts and Jobs Act of 2017, it's important to know what this piece of legislation entails. Signed into law by President Donald Trump back in December 2017, the bill was touted as a measure that would bring financial gains to the middle class and small business owners.
To that end, entrepreneurs should be excited for this year's filing, since it's the first time the law's new 20 percent deductions will impact returns. The deduction is available for qualified business owners at the head of pass-through organizations, such as sole proprietorships, S corporations and partnerships.
While that all sounds great, some caveats were put in place at the bill's passage. Depending on if you're filing as a single or married person, what kind of business you run, and how much income you make, you may or may not be able to claim the 20 percent deduction. Other deductions were removed or altered, so the tax software you select should be able to walk you through these new rules.
Tax Software FAQs
How soon can you file your federal income tax return in 2019?
When it comes to filing your federal income tax return, earlier is generally better. As soon as you get all relevant documentation in hand, you can file with the IRS. Employers have until the end of the year to send out their W-2s. Most other tax forms will be sent out during this time as well.
This year, the IRS didn't officially start accepting tax returns for the 2018 tax year until Jan. 28, after ensuring compliance with the Tax Cuts and Jobs Act.
Which tax filing software is the best?
Through our review process, we determined that Intuit TurboTax is the best overall online tax filing software on the market. Its long list of features and easy-to-use interface, coupled with the ability to remotely get help from a CPA, make it a strong solution for most individuals and small businesses. With excellent customer service to guide users through the tax filing process, TurboTax sets itself above its competitors.
What is the easiest tax software to use?
H&R Block's online software for self-employed filers is incredibly easy to use. Self-employed individuals already have a lot on their plates, so the fact that H&R Block's software makes filing taxes easier is a huge boon.
You can import tax returns from other vendors for previous years to speed up the data input. Self-employed taxpayers who sign up for the company's Self-Employed package can use the software to find business deductions and other beneficial rules that lower their tax burden while increasing their potential tax return.
The software's interface is easy to navigate, and unlike some of its competitors, H&R Block lists its tax filing costs upfront, giving prospective users an idea of how much the service will affect their wallets. The service also gives its users access to professional help, though that service costs extra.
Why would you use tax preparation software?
There are many reasons why someone would want to use tax preparation software, but speed and accuracy are the two major factors. Before the advent of computer software to handle the tax filing process for you, people had to enter their information by hand over multiple forms, often writing the same information over and over.
With today's digital options, data input is as easy as scanning an existing form for the relevant information to be automatically added into the appropriate fields. What would take hours to complete by hand takes just minutes with a computer or mobile device.
As for the accuracy of online tax software, it's important to understand just how detrimental any errors or omissions can be to a taxpayer. In the IRS' eyes, such mistakes are grounds for audits, fines and other injunctions like levies against your assets. Today's tax software checks your filing for any errors before sending your documents to the IRS. Most modern tax software also checks for any deductions or credits that may be applicable to your particular tax situation, potentially increasing the amount you receive in a return.
Additional reporting by Adam C. Uzialko.
Ready to decide which tax software is right for your business? Here are more resources for you to consider before making your decision:
- How to Choose Online Tax Software for Business: A Buyer's Guide
- Best Overall Tax Software for Small Businesses: Intuit TurboTax
- Best Tax Software for Self-Employed: H&R Block
- Best Free Tax Software: TaxAct
- Best Enterprise Tax Software: ONESOURCE
- Best Software for Tax Professionals: Drake Tax
If you'd like your company to be added to this list and possibly considered as a best pick for our next round of reviews, please email your request to email@example.com.
The one caveat is that mom-and-pop operations or startups probably won't need this level of support; it would be overkill for smaller operations. But midsize companies and beyond will find ONESOURCE to be highly reliable, accurate and powerful tax software.